STATE REGULATORS STALL MEXICO WIND FARM PLANS

Fear is S.D. utility users may pay too much for power

Horacio Gonzalez Moncada of Terra Peninsular, a conservation group, worries about what will happen to pristine desert landscapes like this near La Rumorosa in Baja if a wind farm is built there. Peggy Peattie • U-T

Horacio Gonzalez Moncada of Terra Peninsular, a conservation group, worries about what will happen to pristine desert landscapes like this near La Rumorosa in Baja if a wind farm is built there. Peggy Peattie • U-T

Plans for a large-scale wind farm in Mexico to supply electricity to San Diego County have been on hold as state regulators discuss whether utility customers would pay too much for the power.

Five years in the making, the Energia Sierra Juarez project would supply enough electricity to power about 65,000 homes. It would play a small part in helping San Diego Gas & Electric meet state mandates for renewable energy from sources such as wind, solar and geothermal plants.

Electricity retailers in California must provide one-third of their power from renewable sources by 2020 or face fines. The additional cost to ratepayers of that green energy is a complex equation, shrouded by confidentiality provisions designed to ensure competitive bidding.

But terms of the proposed 20-year power purchase agreement for Energia Sierra Juarez have been made public before approval under state laws governing negotiations between corporate affiliates — in this case SDG&E and Sempra U.S. Gas & Power, both subsidiaries of the San Diego-based holding company Sempra Energy.

SDG&E customers would pay an estimated $820 million over the life of the contract. At a public meeting in San Francisco, California Public Utilities Commissioner Mike Florio questioned whether that price was truly competitive, delaying a vote on the contract until this Thursday.

“It’s still higher than what we could do,” said Florio, who previously worked as lead attorney for a utility watchdog group. “If we’re going to be successful with our renewable energy initiative, we have to prove to the world not just that we can do it — but that we can do it with reasonable cost to consumers.”

Florio did not specify what he considers an appropriate price.

The commission’s decision could have implications for the future of wind development in Baja California, a magnet for prospectors hoping to sell renewable energy to utility companies in California or Mexico’s government electricity monopoly.

Beyond its current proposal directly across the border, Sempra has leased enough property from communal land associations in Mexico to eventually install turbines along a hundred-mile stretch of windswept highlands atop the Sierra Juarez.

Shunning the initial contract proposal would go against the advice of Public Utilities Commission staff and a third-party contractor hired to evaluate the project. SDG&E and Sempra already lowered the contract price last year in response to a general decline in prices for renewable power.

SDG&E procures its energy on a “least cost, best fit” basis that takes into account factors beyond price, such as access to transmission and how power generation fits its hourly, seasonal and long-term energy needs.

In an email, SDG&E called the contract price consistent with other wind projects approved this quarter and “in alignment” with the past five power purchase agreements that SDG&E has executed.

Specifics of those contracts are not available to the public until at least three years after power production begins.

At $106.50 per megawatt hour, Energia Sierra Juarez would charge more than double the price of the most cost-efficient wind farms in the United States. Those are in Texas and the Midwest, according to Mark Bolinger, a research scientist at Lawrence Berkeley National Laboratory.